Earlier this week, Sameet Sinha, Sr. Equity Research Analyst at B. Riley & Co., published a research report on the new gTLD business and Rightside. The report, which is available to B. Riley clients and subscribers, made some projections about the new gTLD domain names and the impact they will have across the board in the domain industry (from registries to registrars to service providers…etc). In addition, Mr. Sinha initiated coverage on Rightside (ticker: NAME) with a Buy rating and $15 price target.
Mr. Sinha’s report offered an extensive overview of the domain name space, as well as a history of the new gTLD program. It was quite comprehensive, and I think it will give readers a greater knowledge about the technical aspect of domain ownership and operations. If someone were to ask me for a resource to explain the gTLD program, I think this report would give them all of the information they need to learn about its genesis and future.
I thought Mr. Sinha’s report was quite interesting, especially because it comes from someone outside of the domain investment space. With Mr. Sinha’s permission, I want to share some excerpts from the report as well as a few projections that were made:
- “With the onset of the gTLD program, we believe we are in the beginning stages of democratization of the web, which would allow more power to domain buyers and sellers.“
- “Since then we have seen a level of inflation that indicates a value of about $2MM per gtLD“
- “We believe the importance of search engines could increase significantly with new gTLDs as consumer confusion about the extension of the business they want to find will lead to higher usage of search engines, in our opinion. “
- “Early adoption of TLDs have been strong “
- “We estimate new gTLDs will be 15%+ of domain industry by 2016 “
- “We officially estimate that gTLDs will generate about $930MM in bookings in the 2014-2016 period, reaching $500MM in 2016, from virtually zero in 2014.”
I won’t directly comment about Mr. Sinha’s projections, but to me, it appears fairly aggressive, especially considering where we are at to date. Last week, I read a report from Centralnic, and the company chairman said “To date, demand levels have fallen short of industry expectations, however CentralNic has performed strongly relative to the market with the new TLDs it has launched to date and is well positioned to take advantage of the growth in demand when it comes through.”
On a separate but related note, I think it is great to see an analyst from a firm like B. Riley & Co. covering the domain name space. The more coverage of this business, the better for those of us who make a living in the industry. Whether there are 20 million new gTLD domain names by 2016 or not, it’s nice to see coverage of the domain name space at this granular level.
If you would like to have access to the report, you should contact B. Riley & Co to get access to it.
Thank you to Frank for sharing this report with me.
Glad I could share it. I feel like some of the estimates could be conservative.
– many registrars have not signed the 2013 RRA so they can sell legacy strings like com/net/org but can’t sell new GTLDs yet.
– many registrars have not on-boarded with all the registries. Netsol and Godaddy for example are just bringing Uniregistry online this month.
– The margins in new GTLDs are much larger than Com/Net/Org .. When Uniregistrar sells a com name we make pennies.. When we sell a Donuts string we make dollars.
– 90+% of registrars who “do” offer new GTLDs have not implemented match-suggest search features which offer new gtld’s when the user enters an exact match for the extension.
.. More registrars are signing the 2013 RRA each day, making it possible for them to sell new GTLD’s, Registrar search is going to change this year so that available exact matches start getting offered to customers. Registrars will start pushing new extensions because they make 100 times more money selling them.
All those factors and others are helping build a storm of growth in new extensions. It’s really an exciting time.
Everything said above is true, I saw the same thing when godaddy pushed .co.
There are a few kinks in the armour of gtlds though, one is end user annoyance paying annual premiums, another is no cap on rentals going forward which an end user would be clueless about. When I go to the mall, I have many stores, and retail employees push things on me, I usually stay the course and know what I am there for.
It can be hard to build out extensions when many of the top tier terms are held back by the registries. As strong end users want strong brands, and little big brother type policing watching every step. The fine print of many gtlds haveany clauses, once exposes to masses will make them think twice. The .com .net are more free straightforward extensions, where the renewal is the same, and the market makes the keyword makeup a worth. That is what people want, not what is best for registers to be more profitable, two sides to every equation. The above is from the registers bottomline.
“Since then we have seen a level of inflation that indicates a value of about $2MM per gtLD“
“Early adoption of TLDs have been strong “
“We estimate new gTLDs will be 15%+ of domain industry by 2016 “
“We officially estimate that gTLDs will generate about $930MM in bookings in the 2014-2016 period, reaching $500MM in 2016, from virtually zero in 2014.”
It appears he’s gauging his analysis on defensive registrations and domain investing, which makes this report meaningless IMO.
Where is the estimation that shows Internet users will type gTLD’s into the address bar?, If he’s going to throw out wild predictions then why not throw out the most important?
My prediction is by mid 2018, Frank and all the rest of you are going to be eating a lot of crow.
Most of the best new gtlds haven’t been released yet but numbers continue to get worse and worse for new releases. Most are lucky to get 2-5k in the first day or two. there will be higher demand for certain new gtlds but i think they will forever be a niche market.
Wait till the drops start happening next year.
In the past with extensions, even with drops, the overall numbers still went up. Look at the more recent .me and .co, first, second year drops, new regs still outpaced them.
This is something different. The regs for most of these are already extremely low. When renewal time comes up next year, these are sure to go negative.
Look at registrar stats. See how many can’t even get 10 regs a day, and these are new.
The numbers are really bad, these have pretty much been a failure.